9/13/2010 @ 6:00AM

Clean Up The Mess At HP

Hewlett-Packard
has always made good equipment. It makes some of the best servers, printers and PCs on the planet, and it has a very large and loyal customer base to prove it. But it also makes some very bad decisions, and those decisions are beginning to tarnish a reputation that took more than half a century to develop.

What’s more, those decisions are beginning to affect its relationships with some of its closest partners. It’s not that the HP board wasn’t right in throwing out Chief Executive Officer Mark Hurd. Given the sparse facts that have accompanied that decision, we’ll probably never know the truth about what really happened. What’s more, it’s really none of our business. But the point is we already know too much and we keep getting reminded of it.

The tiff with Oracle isn’t something any company should deal with publicly. It can be dealt with behind closed doors, which is the way some of the most important decisions in the industry have been handled with issues like this for years. These are private matters, and they’re best kept private. When one of Digital Equipment Corp.’s top engineers defected to
Microsoft
after developing technology that ultimately became the basis of Windows NT–and every version of Windows since then–DEC cut a deal to have its Alpha chip become one of the key ports for the operating system.

That was the right way to deal with this kind of matter. You don’t confront your business partners and customers. You recognize their value and use whatever leverage you have to your maximum advantage. That’s good judgment and good business.

It’s true that Oracle’s purchase of Sun is a potential competitor to HP. It’s also true that HP bundles Oracle software on its own servers and that it can potentially tie into broad-based Sun sales for printers and PCs.
IBM’s
approach to Microsoft was to offer Microsoft products when it made sense even though it has been offering rival operating systems for years. But HP’s relationship with Oracle is already damaged, and it remains to be seen whether it can be fixed.

What’s particularly unsettling is that these decisions are being made by people with no real stake in HP. Boards of directors can be very active and very good, but they also can be very detached. Boards typically work best when the founder of the company is still very active and has become chairman. They don’t work well when major investors bring in their buddies, who spend one day a quarter playing golf, having dinner and then going back to work.

HP’s board of directors includes lots of distinguished people, but none of them has a long history with HP. They don’t know the culture or have a technology vision. In fact, only one–John Joyce–ever worked for an IT systems company. (Joyce was a top dog at IBM Global Services.) Yet these are the people the CEO reports to, and they’re the ones responsible for all decisions made by the company.

It’s time to clean up this mess–privately–and get back to business. For HP’s board, it’s time to accept responsibility for its missteps and take appropriate action. For HP stockholders, it’s time to hold the top brass, meaning the directors, accountable. These kinds of decisions are good for IBM and
Dell
, but they’re not good for HP and its partners or the millions of people who depend on HP products to do their job.

Ed Sperling is the editor of several technology trade publications and has covered technology for more than 20 years. Contact him at esperlin@yahoo.com.